Transcript of Episode 118 – Matt Ridley on How Innovation Works

The following is a rough transcript which has not been revised by The Jim Rutt Show or by Matt Ridley. Please check with us before using any quotations from this transcript. Thank you.

Jim: Today’s guest is Matt Ridley. Matt is a journalist and author of many popular books, including The Red Queen, Genome, The Rational Optimist, and The Evolution of Everything. He’s also chairman of the International Center for Life in Newcastle England. And is he a member of the British House of Lords. That’s a first for The Jim Rutt Show. Welcome Matt.

Matt: Jim it’s great to be on the show with you.

Jim: It’s really great to have you, and you do not know this, but one of your books had a major influence on my life. And that was the Red Queen, which I read when it first came out, which was 93 or 94. And of course with the science education, I’ve always been aware of evolution, but it had just been one of those things in my large hit of ideas. But that book smacked me right between the eyes. And since that point literally, I have looked at the world much more strongly with an evolutionary lens.

Jim: In fact a couple of years later, I followed up reading The Red Queen with Dan Dennett’s book, Darwin’s Dangerous Idea. I then got into studying and learning about Evolutionary Computation by reading John Holland’s books on Genetic Algorithms and on it went from there. In fact, when I retired from business in 2001, I took up Evolutionary Computation as my field of endeavor, which led me to being invited to the Santa Fe Institute where I’ve been affiliated for the next 20 years. So it all started with The Red Queen.

Matt: Oh my goodness. Well, that’s fantastic. And Dan Dennett uses this phrase about natural selection, that it’s like universal acid, it burns through everything. And that was part of why I wrote the book, The Evolution of Everything. Was to try and point out that once you have an evolutionary mindset, once you see the way things change through competition between random variants, you see it everywhere, you see it in language, you see it in society, you see it in technology and it really does change the way you see the world.

Jim: Literally all my work since then in both business and in science has been informed by the evolutionary lens. I have not yet read The Evolution of Everything, but I’m going to have to go back and check that out to see what you bring to the party in that general lens. So I strongly recommend people read The Red Queen if you haven’t. And Genome was also very damn good. I read that when it came out as well. So anyway, today we’re going to be discussing Matt’s recent book, How Innovation Works: And Why It Flourishes in Freedom. Let’s start out with a distinction that you make between innovation and invention. People often get these things confused, but you make a very nice distinction, which was very useful.

Matt: Yes. I think it’s quite important to realize that when you invent a new gadget or a new device of some kind, that’s only the beginning of the whole process of innovation. You then got to make it affordable, available, and reliable. And that’s a long struggle often, and it involves different sorts of expertise, different sorts of people. It’s a much more collective enterprise, a much more gradual enterprise. And quite a lot of what we call invention is actually about this process of incremental innovation rather than the bright idea in the first place.

Matt: There’s a lovely story that Charles Townes, the inventor of the Laser, used to tell about a Beaver looking at the Hoover Dam and saying, “Well, I didn’t make it, but it is based on an idea of mine.” And that I think captures the sort of big journey you have to go from the first prototype to the actual thing that people take up and use.

Jim: Indeed, at the Santa Fe Institute, we use exactly that same distinction. We think of the invention of say the transistor or something like that. Then the whole electronics industry that came from it as a whole series of innovations and things that really have changed our life are frankly, the innovations. Before we get into some of the innovations that you write about and their importance, let’s drop back a little bit, get a little technical and scientific for a moment. You explain the idea that innovation and invention both are essentially creating improbable order that is useful in the universe. And you talk about evolution as one form and human invention, which is another. Could you talk about a little bit about the idea of improbable order and how that informs what we’re talking about here.

Matt: I think this is a very useful way of seeing what’s happening in the world. The reversal of entropy, chaotic and muddled stuff gets turned into stuff that is not chaotic and not muddled, but actually is quite well constructed. So looking in front of me across the room, I’m looking at a chair and that is not a random structure. It’s a design structure designed for people to sit on the same with the telephone that I can see on my desk, and the same with the tree that I can see growing outside the window. The arrangement of the atoms in the trees, so that it’s tall and thin and it has leaves, well it doesn’t have leaves at this time, it has branches at the top, is non-random. It’s highly improbable that the atoms in that tree would end up organized in that way.

Matt: In order to make it so, energy has to be put into the system. That energy comes from photosynthesis. So it originally comes from the sun. But energy to create order is what biological evolution does. It harnesses energy to make structures that are functional. And the same is true of our technology. We apply energy to the world and end up with telephones, and chairs and things like that, that are useful to people but are highly improbable structures in terms of whether they could occur randomly out of the atoms of the universe if they were sort of thrown up in a salt shaker and left to fall to earth. I’ve got a bit muddled with my metaphor there but you get what I mean?

Jim: Yeah. They are like one of the classic metaphors, is particularly about human innovation. As you wouldn’t expect a tornado going through a junkyard to assemble a 747.

Matt: Exactly.

Jim: Now until the impact of particularly technological progress, you quote Deirdre McCloskey, who’s a very interesting economic historian about what she calls the Great Enrichment. Maybe you could paint for us with a broad brush, how much humanity has actually gained from technological innovation over the last 300 years or so?

Matt: Yes. We’re living through an extraordinary time compared with all the previous generations of human beings that have ever lived. At least the last 200, 300 years, we’ve seen extraordinary times. We’ve seen transformations in the living standards of people during lifetimes that are quite unprecedented. I mean when I was born, about 60% of the world lived in extreme poverty defined as less than $2 a day, in today’s money by the way. That’s only true of less than 10% of the population of the planet now.

Matt: Child mortality is down by two thirds in my lifetime. Lifespan is up by a third. Lifespan is going up at the rate of about five or six hours a day globally. These are incredible transformations in human living standards and they come about of course because people have more money, and more assets, and more services available to them. But all of that in the end comes back to innovation. Innovation producing vaccines, or antibiotics, or motorcars or whatever it might be. There’s a particular statistic that I think drums home what’s happened better than anything else, which is how long you have to work in order to afford to turn on a light for an hour and give yourself basically the equivalent of around 60 watt bulb burning for an hour if you’re on the average wage.

Matt: And it’s about a third of a second’s work, we’ll give you an hour of light today. In 1950, eight seconds work, in 1880, 15 minutes of work to get an hour of light and in 1800 with tallow candles to get that much light. On the average wage you’d have had to work for six hours. So the obvious point is that an average person couldn’t afford a candle in 1800. That’s a measure of what innovation has done for us over the last couple of 100 years. And we take it for granted and we bank it and forget it, but actually it’s the most important fact about the modern world.

Jim: Indeed, and it has been continuing for a while. My own mother born in 1929, grew up with no electricity, no indoor plumbing and no central heat. And that was in the wilds of Northern Minnesota where it’s damn cold in the winter time.

Matt: Wow. That was cold.

Jim: I mean, they literally had no electricity, they had kerosene lamps. And again, it was an entroview or part of their household budget, affording kerosene. And today with an LED light, you say it’s a fraction of a cent to buy an hour’s worth of light, quite remarkable, within the lifetime of someone who only passed away a few years ago.

Matt: And I reflected the other day that my grandparents had seen extraordinary changes in transportation particularly, because they were born before the motorcar and the airplane around 1900. And they died with men on the moon and supersonic airliners in the air. That was quite a change.

Jim: Indeed. So let’s now jump into some of these inventions, is one of the best parts of the book and I just loved it, even though I knew some of the history about most of them, you went into some great details and some great stories, and let’s start out with what you call possibly the most important event in the history of humankind. The invention of the steam engine and the ability to turn heat into work. Maybe you can talk a little bit about the significance of that, and then the amazingly complicated story of how we were able to do that as a human species.

Matt: Yes, exactly. Well, I think this is the real key to the Industrial Revolution. Not everybody agrees with me on this, but I think before 1712, there were two forms of energy in the human world. There was heat and there was work. You got work from wind and water and oxen and your own muscles. You got heat from wood and coal, but there was no connection between the two or at least very, very little connection between the two. Then along comes a thing called the Newcomen Engine, the first static steam engine in 1712, and that converts heat into work.

Matt: It takes the heat of a fire and uses it to create a steam vacuum in a cylinder, which is then collapsed by injecting a little bit of cold water into it. And that collapse effectively uses the weight of the atmosphere to drive a piston down, which pulls on a pulley and pumps water out of a coal mine. That’s what the whole thing was about. So it’s a very small and niche application, but it goes on to be the main source of all our energy today. The vast majority of our energy today comes from heat, doing work, whether it’s in a jet engine on an airplane, or whether it’s in a turbine in a power station, turned by gas or coal or nuclear that is keeping your lights on.

Matt: So that invention is terribly important. We don’t really know where Thomas Newcomen got the idea. We don’t even know what he looked like. We don’t have a picture of him. We don’t really know his story. We know that he was a sort of blacksmith in Southwest England. There were two people who were trying to make the same idea work before him, and it’s possible he borrowed or stole their ideas and made them practical. One was a French man called Denis Papin, who spent a lot of time in London as well, who was a genuine and genius I think, a brilliant guy, but could never quite get anybody to take him seriously or put his ideas into practice. At one point, he wanted to make a boat driven by steam. He was about 100 years ahead of his time with that.

Matt: And the other was a guy called Thomas Savery in London who did manage to build a working steam engine, but it was basically just a toy and it was never really practical for any working purpose, until along came this guy who as far as we know, Thomas Newcomen, had no formal education, may not even have been properly literate. And he solved the problem by sort of tinkering with machines and made it work.

Matt: It then took decades before this technology became much more efficient and we needed James Watt to do the separate condenser and then use high pressure steam. And suddenly the efficiency starts to get much higher and then you put it on wheels and make the locomotive out of it and so on. And eventually you end up with the turbine that drives electricity system today.

Jim: One thing I love about this story is that it highlights many of the themes that you address elsewhere. The fact that it’s sort of a team sport, this idea of the great inventor is probably greatly overstated in our popular culture. And you mentioned various people contributed to it. Then also that there has to be a cohort of other supporting technologies around it, particularly Watt’s work was strongly influenced by advances in metallurgy and precision metal work, et cetera. And another one that I’d love you to speak to a little bit is this is a fine example of where technology was actually before science. And in many ways, a driver of science, I recall from my readings of the evolution of science of thermodynamics, a whole lot of it was informed by trying to understand the steam engine.

Matt: That’s exactly right. It’s a good example of how science is the fruit of technology rather than the seed of technology in that case. We tend to think of science as the seed and technology is the fruit, but actually it’s quite often the other way around. Another good example of the same phenomenon from around the same time is a rather more topical subject. And that is vaccines. The idea of inoculating people against diseases, albeit not with … It wasn’t called vaccination, it was called variolation. Was brought to America by a slave working for cotton mother in the 1710s. And around the same time, a woman who was the wife of the British ambassador in Constantinople brought the same idea to London and persuaded a bunch of people to try it and it worked although it was still quite dangerous.

Matt: So variolation which became inoculation, which became vaccination, started working and denounced by doctors as a mad idea with no logic behind it. Rightly so, it doesn’t make sense. Why would giving a little bit of smallpox to someone make them immune to smallpox? But it takes 200 years till Postrel starts to understand it. Then much later, and even to this day, we don’t fully understand how the human immune system works. So vaccination precedes immunology by a long, long way.

Jim: Indeed. And of course later we find some more technologies driven by science, but then that earlier initial period, it was often the other way around. The other thing I’d like to point out, this idea of the steam engine being this phase change in human evolution in some sense is true. However, there was an awful lot going on in the area of innovation, particularly around automation kind of contemporaneously with the steam engine and before it was actually applied in the factory setting, things like the spinning jenny and the water frame, and I actually went and looked it up. Then the United States, no coal was mined until about 1804. And our whole first generation of industrialization in the United States was actually all water powered.

Matt: You’re dead right about that. And it’s an omission from my book is that I decided to leave the textile industry out, partly because it was a fairly well known example and I had to leave some things out. And partly because it’s such an enormous and complicated subject. And actually Virginia Postrel has written a history of textiles more recently. That has some beautiful stories about the automation of the textile industry, but you’re right.

Matt: With water power, it was possible to drive machinery that increased the efficiency of textile manufacture pretty spectacularly. And this was going on in the 18th century without the involvement of heat and steam as you say. There was a limit to how far it was ever going to get and of course it was geographically constricted. It had to be in the Pennines in Northern England, where there was enough hail to give you the fall of water to drive the mill wheels and so on. Likewise in New England, particularly you get relatively mountainous landscape that gives you the hydro power as it were to do that kind of thing.

Matt: And it’s a very good question as to whether or not you could have had an industrial revolution if you hadn’t harnessed fossil fuels through steam engines. I’m not convinced you could, I think it would have petered out like the various sort of automation experiments in China in 1000 years ago. So were very, very intriguing, but they never really led anywhere. And you even get little echoes of this in Ancient Greece and Ancient Rome. So automating human processes can be done with other forms of energy, but it probably doesn’t quite get the auto catalytic property of heat to work. In other words, that the more you do, the more you can do.

Jim: Certainly heat to work allow the explosive scaling of automation to almost everything in just a remarkably short period of time, from not just manufacturing, but also transportation, the electricity. It was extraordinarily generative. So I sort of think of them as co-evolutionary this idea of automation plus heat to work. Then that exploded into what became essentially the modern world starting around 1800.

Matt: Exactly. And if you think of a sailing ship as a sort of example of very, very intricate piece of machinery designed to capture the energy of the wind with relatively few people operating it, then that’s another example of making progress in. And by the way, it’s a long time before sailing ships give way to steam, right into the middle of the 19th century, you’ve got … In fact towards the end of the 19th century, you’ve got these fast clippers, full mastered clippers competing on price, if not on speed with steam. So it’s not impossible to have civilization without fossil fuels, but I have a feeling that it’s the kind of civilization where only a few people get rich. If you want everyone to get rich, then you have to have a huge amount more energy sourced from somewhere.

Jim: We could have eventually stumbled our way there perhaps, and invented photovoltaics, et cetera, nuclear power, but I suppose … It’s kind of an interesting science fiction story to imagine alternative history on an earth that had no fossil fuels. Just sort of thinking out loud here. But it might’ve taken us 1000 years rather than 150 or 200 years to get to where we are today.

Matt: Yes. And of course, what you’d need to have was wood and certainly in the US locomotives would have run on wood for a very long time, as well as coal. And a lot of Chinese industry in the Song dynasty was fueled by wood. And that was the problem because essentially, wood runs out quite easily. You find you’ve got to go further and further to find a forest that hasn’t already been felled. And then the transportation distance becomes a problem and you either have to move your city and your factories. So wood just doesn’t grow fast enough to supply the needs, whereas dig a coal mine, and you can still be producing coal 100 years later from the same hole enough to make a real difference, let alone oil or gas well.

Matt: It’s surprisingly the endowment with these extraordinarily concentrated forms of fossilized solar energy, which is what it is, was actually very useful. And it’s a key part of the story. We’re supposed to demonize fossil fuels now, but I have to say they stopped us cutting down forests. They helped get rid of slavery. They did actually do some good stuff.

Jim: I also like the alternative science fiction view that if our society collapses, it may have a hard time re-rising because of the absence of fossil fuels, and that we have depleted most of the easily accessible ones already. So that’s kind of an interesting thought.

Matt: Yes. I’m not quite sure. I agree with that because actually, if you look at the fracking revolution, we’ve suddenly accessed gas in the source rocks rather than just in the rocks where it can accumulate and more permeable rocks. And that means that the amount of gas reserves in the world has sort of gone through the roof in recent years. So the idea that we’re going to run out of these things I think doesn’t really stack up. Both oil and gas have become much more available, thanks to the knowledge of how to fracture rocks underground.

Jim: That is true. But of course it requires quite a bit of technology to do that while the original oil wells didn’t, right? You dug a hole and the pressure forced the oil out of the ground. So whether we could bootstrap from a collapsed society that fell back far enough I think it’s an open question.

Matt: We’d have a lot of other problems, wouldn’t we? The few of us who are left might not have the right skills.

Jim: Exactly. Well, probably only 1% were to survive, but let’s go back to talk a little bit about steam and Watt and Bolton and all those. One of the things you mentioned in that story, which you hit on several times throughout the book is the role that patents play for both good and ill in innovation. Give me your thoughts a little bit about how patents have played back in those days and maybe as a leap motif for how they influenced innovation going forward.

Matt: Well, the purpose of a patent is to encourage innovation, it’s to reward innovators so that they will go out and innovate. The evidence that they work in that respect is actually surprisingly sketchy. Certainly in their modern form where patents are immensely complicated documents. I was actually trying to read a pattern just two days ago and 240 pages in, I was lost inside a paragraph, within a paragraph, within a paragraph. They’re not easy things to understand, but what they do is they give a monopoly reward to an inventor for a period of time.

Matt: Now, when they expire, you tend to see a burst of innovation. This was true of James Watt and his patent when his patents expired, there was suddenly a lot of experimentation with new forms of steam engine, including locomotives and things like that, suggesting that his patent had held back innovation. You saw something very similar recently with the expiry of the patent on 3D printers. There was a burst of innovation following the expiry of a key patent there. And if you look at cross country comparisons about patents, countries that have stronger patent systems are weaker ones, countries that changed their patent systems to make them stronger or make them weaker.

Matt: Do you see the strengthening of patents as incentive to innovation? Frankly, you don’t. There’s very, very little evidence for it. In fact, there’s quite a lot of evidence that patents are getting in the way of innovators because they create thickets and tollbooths that other inventors have to struggle through. They effectively create sort of gate keeping. And in fact, an inventor doesn’t need a monopoly to make a profit on his innovation because he’s got the headstart. He knows stuff that other people don’t.

Matt: And by the way, somebody was telling me the other day, which I didn’t know, is that the great skill among patent attorneys is to write them in such a way that they seem to reveal what’s in the innovation, but they don’t actually. So they leave a little bit hidden. So that the tacit information that the inventor has to enable him to stay ahead of the game is much more important. If you look at the software industry in the last 40 or 50 years, patents have been fairly valueless. It’s not been the way to defend your lead, is to take out a patent and sit back and let the royalties roll in.

Matt: You’ve had to keep moving because people can innovate around your patents very quickly. But that hasn’t stopped people innovating, just as the invention of streaming hasn’t stopped people making music, copywriting music is now much harder to enforce than it was 30 or 40 years ago. And the Beatles can’t sit back and let the money roll in the way they used to. They have to go on the road and do live gigs and write new songs and things like that, but they haven’t given up.

Matt: So I’m strongly skeptical that we overvalue the importance of patents in innovation with one exception, which I’m prepared to grant, which is that given the enormous cost of getting approval for a new medication, a new drug, it does seem wrong that anyone can pile in and make that drug as soon as it’s got approved. So you have to find a way of rewarding pharmaceutical companies for inventing new pharmaceuticals. But I don’t think patents are the best way of doing even that.

Matt: I think prizes are a better way where you essentially dangle a prize in front of the company and say, “If you can invent a cure for cancer, we will give you a contract to buy your product for X amount of money.” Governments could do that. The Gates Foundation does that already actually for vaccines, for developing countries and things like that. So I think that if it were up to me, I would sweep away the patent system and rewrite it with something else. It might be very hard to do overnight. We’ve got used to the way we do it, but it’s a counter intuitive point.

Jim: I was a Tech entrepreneur back in the 80s and 90s. And in those days, the general thinking was most software was not patentable because it was an algorithm and algorithms were specifically ruled out and we hadn’t hired the fancy lawyers that figured out sophistic reasoning, which you could patent certain kinds of allegedly software innovations. And the whole PC revolution basically proceeded without much patent protection at all.

Matt: That’s really interesting.

Jim: It was a very fruitful time for exactly that reason that nobody considered what they had done patentable. And it was all part of a community of innovation. And we borrowed ideas from each other and it worked great.

Matt: Well, even if you do allow some patenting and some copywriting, it seems to me that the extent of it has got out of control. I’m an author. My books are automatically copyrighted for me. I don’t have to assert them anymore. That was a change in the laws that came in. And they’re copyrighted until 70 years after my death. That is to say my heirs continue to rake in the millions and millions and millions of pounds I make each year. That’s a joke by the way, from my books for 70 years after my death. Well, that’s ridiculous. Let them get a job, my grandchildren. Why should they be making money off my work?

Matt: The reason for that change in the law a few years ago to increase it to 70 years was to help out the Disney Corporation, which was alarmed with [inaudible 00:28:37] Mickey Mouse’s copyright was going to run out. Well, I’m sorry. I don’t think we should be in the business of helping out the Disney Corporation. They can help themselves up.

Jim: Even more absurd in the Disney case. And I’ve been involved a little bit in discussions around intellectual property law, is in the US constitution. It specifically says these things are for a limited term to encourage invention. Well, guess what? The Mickey Mouse movies already been shot. So how could extending the copyright on them be anything other than a pure windfall to Disney in return for the massive amount of money they spent lobbying and shoving in the congressman pockets?

Matt: I’m with you on that.

Jim: In fact, I’d like to see copyright be limited to 15 years. That seems to me perfectly reasonable. It’s about 99% of the sales of most books. And would also just interestingly, by the time you’re 30, allow you to mix and match the music from your teens into your next generation of inventions.

Matt: Right. In my book, The Rational Optimist, I quoted the lyrics of the song, What a Wonderful World. And I had to personally contact the owners of the copyright on those song lyrics, who turned out to be owned by three different people and pay each of them $200 or something, to be able to quote just those simple lyrics. I watched children grow, whatever it might be. And that song was written in the 1920s and the copyright doesn’t belong to Louis Armstrong’s ass, it belongs to someone else. I can’t remember their name. But that’s mad. And some of the recent cases where songwriters have sued other songwriters for using just a few phrases of notes of a tune that resemble something that they wrote has got out of hand, it really has.

Jim: Indeed. Well, let’s move on back to the story of innovation and perhaps in the popular imagination, the conomical story of innovation is Thomas Edison and the light bulb. Well turns out most of what we know about that is wrong. Why don’t you tell us the real story of what happened there?

Matt: Well, Thomas Edison was a great innovator and he deserves credit for the light bulb in the sense of making it an innovation that was reliable, affordable and available. But he wasn’t the inventor of the light bulb. There were lots of people who were the inventor of the light bulb. If you count him as one of them, there are 21 people altogether, according to one study who can be credited with independently coming up with the idea of the light bulb. Here in the Northeast of England where I live, we were very proud of Joseph Swan inventing a light bulb long before Edison, but in Russia, they talk about Lodygin and so on around the world.

Matt: This is a phenomenon known as simultaneous invention. And it’s very true of almost any technology you want to look at, whether it’s the telegraph, or the telephone, or the airplane, there are several different people who could have got there about the same time, and sometimes who did get there independently at the same time. This isn’t something sort of weird and supernatural that’s happening. The reason for it is because the contributing technologies to making that technological leap had reached the point where the leap was ripe. It was ready to go. And you can see this very clearly in the case of, for example, the search engine, probably the most useful invention of my lifetime and the one that I use pretty well every day and invented in the early 1990s.

Matt: But if Google has never been founded, we’d still have search engines. There were lots of other companies coming up with it around the same time. It’s not in that sense unique to one individual. It’s a case of simultaneous invention. And you can abolish from history half the people who invented search engines and we’d still have search engines. So it’s a very odd phenomenon. And one of the things I find most puzzling about it, is that looking back it’s obvious that the light bulb would be invented in the 1870s, the search engine will be invented in the 1990s.

Matt: But looking forward, it wasn’t at all obvious, nobody saw these things coming. What Edison did that the others didn’t do was put in the hard graft of improving the device. So he tried 6,000 different types of plant material before he settled on Japanese bamboo for the filament of the light bulb. Now that’s recognizing the importance of trial and error, the importance of just keeping on trying to improve something. The way he put it was, invention is 99% perspiration and 1% inspiration, which is a rather wonderful remark or another remark attributed to him is that I haven’t failed, I’ve just found 10,000 ways that don’t work.

Matt: So I think in a curious way, it may sound like I’m saying Edison is less important than we think. He didn’t invent the light bulb. He was one of many who was involved in the invention. But in a way, I’m saying he’s more important because he recognized the significance of incremental innovation by trial and error to make something reliable and affordable. So it’s a very interesting story. He really got that it was a team effort and an incremental phenomenon.

Jim: Even beyond that, even beyond the making the bulb blast 1000 hours, which was an important watershed, the light bulb by itself is pretty useless. You’ve got to have electricity delivered to the business or the home to make it useful. So Edison developed the generators, the transmission lines, et cetera that were necessary to turn the light bulb into an actually useful artefact.

Matt: Absolutely. He was inventing a whole system. And when I say, let’s give credit here to the very large number of people he employed in his Menlo Park Factory. I mean it was a proper … It was a factory. The output of which was innovation. That’s the way I like to think of it. It really wasn’t an individual achievement.

Jim: Indeed. And of course it developed a competition Westinghouse with his AC circuits and which eventually ended up winning of course. And a very, very interesting story. It was kind of fun to revisit that. Now here’s another one where you talk about trial and error and kind of people stumbling into things. This is a story I knew nothing about. It was fascinating, which was the development of chlorination of water.

Matt: Yes. Probably as big a lifesaving inventions as almost anything, maybe not quite as good as vaccination, but the chlorination of water and getting rid of dysentery, and typhoid, and cholera and all these killers was a really important innovation. And the key moment here comes in New Jersey in the 1920s when there is a contaminated water supply that is killing people because houses have been built upstream of where the water’s coming from and sewage is getting into the water system. And the company is under lawsuit to improve the water supply. And one of the people working for the company says, “I’m going to try just putting chlorine into the water.”

Matt: Chlorine is known to be a dangerous substance. So it’s a pretty brave thing to do if not foolhardy. But basically, there are various lawsuits about it. It comes to court and the judge says, “Did it stop people dying?” And the answer was yes. And so the rest was history, but what I wanted to know was the prehistory of that? Why would he choose chlorine? And why did he know that it might work? And the answer was, somebody had tried it in Lincoln and England during a typhoid outbreak earlier in the century. He had got the idea from somebody who tried it in London a few years before. And he’d got the idea from somebody in India who tried it, and he’d got the idea from when there were cholera outbreaks in London in the mid 19th century, they would go around spreading chloride of lime on the streets to try and clean things up. And it did sometimes have an effect.

Matt: So you can sort of trace these ideas back to really quite primitive and unhelpful attempts to solve problems that gradually get better and better until it comes along. And you get this sudden moment when people realize that actually, we now have a way of making water clean and safe that is not in itself dangerous. And the degree to which cities after the New Jersey example, cities just took off and copied this all around the world, is an extraordinary case of rapid adoption of an innovation.

Jim: That was a great one that I had no idea. Another one that you talk about from a similar timeframe, had a little bit different trajectory, and we talk about impact on humanity. I’d argue this one might be the biggest of all, at least in the last 100 years is the Haber-Bosch process.

Matt: Fritz Haber was a brilliant scientist. Carl Bosch was a brilliant engineer and between them, they cracked the problem of how to fix nitrogen from the air and make it into ammonia and then into nitrate and use it as a fertilizer to vastly increase the yield of the world’s farms. We wouldn’t possibly be able to feed 7 billion people today if we hadn’t found a way to fix nitrogen from the artificially using essentially natural gas and pressure and catalysts. And Haber has the original idea of the pressure plus the catalyst working together at a high temperature. But all he gets is a tiny dribble of ammonia.

Matt: And Bosch is the one who over a period of years, turns this into an industrial process that works with enormous expenditure. I mean, it’s a Manhattan project scale thing. This is all happening in between 1908 and 1913, just on the brink of the first World War. And of course it equipped Germany, not just to fertilize its fields, but also to make enormous constitutes of explosive, which helps it throughout the first World War when it’s cut off from Chilean nitrate, which was the source of most of the explosives used by the other side in that war.

Matt: So it’s a really interesting example of brute force innovation if you like. I mean, after their first sort of breakthrough ideas, it’s just a matter of building devices that can withstand the pressure, building with devices that can withstand the temperature, building devices that don’t get metal fatigue when they contain hydrogen, which hydrogen tends to cause in metal, et cetera. Explosion after explosion and the factory. They have to work behind hefty concrete walls to make sure that they didn’t all die every time they tried an experiment.

Matt: But gradually, they get to the point where they can just turn air into fertilizer and make an enormous difference to the world. So half the nitrogen atoms in your body and mine, as we sit here today, have been through a Haber-Bosch process somewhere in the world to get them from the gas in the air, into the form where they can be used by the proteins and nucleic acids in your body.

Jim: There’s hugely [inaudible 00:40:29]. I bet you may or may not know this when you keep up on stuff, but the ammonia industry is still a big one, it’s about $60 billion a year. And there is a group of technologists in the Bay Area who are focusing on quantum computing and are prepared to put billions into the development of quantum computing for one specific purpose, which is to make the ammonia catalysis process more efficient. They believe that with the insights from quantum simulation of catalysis, they could be able to get 20 to 30% improvement in yield and produce an economic value on the order of $10 billion a year from quantum computing. Isn’t that an interesting next follow-on?

Matt: That’s really interesting. And of course, they’re in a race with the Biotechnologists who are identifying more and more bacteria that can fix nitrogen, including one that they found in sugarcane, which looked quite promising. So far, it’s not been possible to turn maize and wheat and rice, the crops that provide 60% of our calories into nitrogen fixing plants like soybeans are. But if that could be done, then none of that ammonia industry would be necessary. We’ll see.

Jim: It’s a very interesting race, but it’s interesting that ammonia one more time is getting not quite yet a Haber-Bosch or Manhattan level project focus, but a significant one, because again, it is central to what we do.

Matt: It’s a big user of energy and it’s a very inefficient process. As you say, the yield is still pretty low.

Jim: It’s very complicated catalytics as it turns out, and it’s all driven by quantum physics and it can’t really simulate that intelligently on a classical computer, but maybe you can on a quantum computer. So we shall see. I’m going to in the interest of time, skip over some of my other favorites like the Wright brothers. And again, another one I learned a lot about, was the Green Revolution. This was really a classic community of people working together over a period of time to produce another gigantic impact on humanity. Why don’t you tell us that story?

Matt: The key guy in this story, Norman Borlaug. Norman Borlaug was a brilliant wheat breeding expert who went to Mexico to try and help improve Mexican agriculture post-World War II. And he heard about a variety of wheat that grew only half as tall. And this had two advantages. One was that it devoted more of its energy into producing grain rather than stalk. And the other was not being so tall. It didn’t fall over as easily. So it could cope with heavier applications of synthetic fertilizer without the thick crop lodging, falling over. And this was being bred by a guy called Orville Vogel in Oregon. And he was crossing various varieties of wheat with this dwarf gene in it.

Matt: And Vogel had got the idea from a guy called Cecil Salmon who’d been on the council staff in Japan at the end of World War II, where he’d come across these dwarf wheat varieties being grown in Japanese experimental farm. Anyway, to cut a long story short, Borlaug turned this into a miracle form of wheat that doubled or tripled the yields of Mexican agriculture almost overnight. And it was at a time in the early 1960s when India and Pakistan in particular were experiencing immense amounts of hunger and malnutrition, and were being written off by a lot of people in the worst.

Matt: Were saying, “Look, there’s no way we can feed all these people. We’re going to have to get used to the fact that, there’s going to be mass starvation every year in the future.” There was a lot of predictions of increasing starvation in the 1970s. Borlaug goes to both Pakistan and India, persuades the authorities there to take up his new varieties of wheat against strong opposition from Indian and Pakistani scientists who said, “No, no, no, we’ll work here and I’m suspicious of his motives and whatever it was.” And he got into shouting matches with ministers of agriculture and things like that.

Matt: It’s a wonderful story, but he had his local champions, particularly a guy called Swaminathan in India who planted up his cricket pitch to show what could be achieved. And within a few years, India goes from chronically short of calories and importing large quantities of food to bursting with wheat and exporting wheat. I mean it takes about 10 years for that transition to happen. It’s one of the most extraordinary transformations in the fate of humanity that has ever been, and it’s called the Green Revolution. And there’s a tendency to forget about it or to carp about it today and say, well, actually it came at the expense of peasant farmer livelihoods, or the environment, or something like that.

Matt: There’s very little evidence that’s true. It basically was a good thing. It took pressure off wild land. It enabled people in rural areas to do much better. So it’s a great, great story. And of course it’s what’s needed, again using the technologies of genetics, which is what this essentially was to transform the prospect of Africa and basically to get us so we can feed seven, eight, 9 billion people off a smaller and smaller area of land, and we’re doing it. We use 68% less land globally to produce a given quantity of food as we did when I was born. That’s a fantastically good thing from the point of view of saving the rainforest and everything else.

Jim: Now, interestingly, and you go into this in the book, the next step in Agricultural Efficiency, the GMO Revolution. While the Green Revolution got some resistance, the GMO Revolution has gotten a tremendous amount of resistance. Maybe you could tell us the story of some of the GMO technologies that have come online and how much resistance they’ve generated.

Matt: It’s a tragic story in many ways because this is simply an improvement on the kind of thing Norman Borlaug was doing. He was finding natural mutants and crossing them. Whereas if you go and insert DNA sequences into plants, you can give them the properties you want precisely and without any danger of side effects. And this idea started cropping up in the 1990s and very soon it’s being practiced. And the best example of it is the insect resistant gene that was taken out of a bacterium. Bacteria that kills insects and put into a crop. It kills insects, but it doesn’t affect mammals. It only affects an enzyme that’s found in insects. It had been used, this bacterium had been used as an organic pesticide by organic farmers. And yet when it was put inside the plant to make the plant resistant to insects, the organic industry rejected it.

Matt: And particularly in Europe, there was lots of complicated political reasons, huge fear engendered about these products. And it resulted in Europe rejecting this technology altogether, becoming far more reliant on US soy beans which are genetically modified because it can’t compete with its own non-genetically modified peas. And using far more pesticides. I mean there is very clear evidence. You use more pesticides if you don’t use these genetic technologies. And Europe never quite banded, but it allowed extreme environmentalist to alter the legislation in such a way that it takes seven or eight years to get approval for a new crop where the result that nobody tries in Europe, it’s only something that people try elsewhere in the world.

Matt: So the entire continent is been cut off these beneficial technologies. And yet throughout this period, not a single person has died because of the effects of this. The benefits don’t just outweigh the costs. There are no drawbacks to this technology that we’ve discovered so far. So for me, it’s a very frightening example of how opposition to innovation, which is much stronger than we often think can actually deny us the benefits of innovation.

Jim: And of course there’s the scandalous story of Golden Rice where here’s a form of rice that would bring vitamin A to the poor children of the world and other innovations that would prevent childhood blindness and a bunch of other things. And through kind of willful and ignorant blockage, the innovation was delayed for about 20 years.

Matt: It’s sort of effectively still delayed. I mean, Golden Rice was developed by a friend of mine, he’s called Ingo Potrykus. He’s a German scientist in Switzerland. And he said, “Look, I know some people would object to these technologies, but if at the end of my career, I were to invent something that’s only useful for poor people, it’s only vitamin A deficient kids in cities, in Asia who are eating nothing but rice because they are so poor who would benefit from this.” But is a huge problem. Half a million kids dying a year of vitamin A deficiency diseases. And if I were to make sure that this wasn’t controlled by a company, but was in the hands of a charitable foundation, so nobody could accuse this of being a corporate profits, then would you export that technology then?

Matt: And Greenpeaces’s answer was no. And they have campaigned against this innovation ferociously for 20 years and they go into places like Philippines or Bangladesh, and they use scare stories to frighten people into objecting to this very, very simple idea, which is to take a couple of genes out of a maize plant and put them into a rice plant so that it has the precursors of vitamin A. And it makes my blood boil, frankly, when I tell this story.

Jim: Mine too. And I’ve known about this story for quite a while. And I go, how many children have gone blind because of this kind of willful blockage of innovation?

Matt: Well, Ingo once asked me, he said, “When I give talks about this, do you think I should show pictures of blind kids or would that be going too far?” And I said, “Do it, come on, They would do it in a flash if your technology was causing kids to go blind.” the opponents would. It just shows how much … He’s a wonderful human being and wanted to play by the rules. And the other side didn’t.

Jim: Let’s talk about one last technology, which is a very interesting innovation at this time and then got stuck. And that maybe now has a new life of innovation and that’s nuclear electrical generation.

Matt: I mean, here comes, say technology that enables us to … As it were a boil, a gigantic kettle with a very, very, very small amount of fuel, basically the fission of uranium. And we developed it quite fast in the 1950s with an eye on making it work in submarines and aircraft carriers and things like that. So we go for a kind of cheap and dirty version in which the coolant is water, which has a slight disadvantage because water can turn to steam and then it loses its ability to cool. Then you can have it as an explosion or a meltdown or whatever. And you have solid fuel and that becomes contaminated and then it doesn’t work anymore. And things like that.

Matt: So it’s kind of first-generation version of the technology and you would want to move on and develop a better version with liquid fuel and with molten salt as the coolant, and these ideas are on the drawing board. But essentially because of Three Mile Island and Chernobyl and Fukushima, the technology then fossilizes and cannot innovate. And the reason it can’t innovate is because any new nuclear fission design is subjected to such an enormously high hurdle of licensing and regulation that it simply can’t afford it. And it particularly can’t afford the learning by doing that you need to do.

Matt: So if you’ve come up with a new design for a nuclear reactor, you essentially have to agree in advance where every nut and bolt is going to go, and that’s not the way the world works. The way the world works is that halfway through the construction process, you realize that you’d actually be better designing it slightly differently. So you’ve changed the design and so on. And that’s the process that nuclear power has been cut off from in my view. The ability to learn by doing. And that’s driven up its cost and driven down its efficiency. And as a result, we’ve missed out on a zero carbon technology that could have been powering the entire world by now, if we’d allowed it to innovate more freely.

Matt: Now, the one place in the world where the regulator gets this point and has changed the way it regulates to try and encourage innovation is Canada funnily enough. And as a result, there are now something like 10 projects in Canada to do so-called fourth generation nuclear power plants. So I’m quite hopeful that we might see a change in that in the years to come.

Jim: I know there’s some very interesting projects. Bill Gates is behind at least a couple of them where the idea is to build nuclear power plants in smaller modules that can be built in a factory. And of course, in a factory there’s continuous improvement with each generation and each unit would be much smaller on the order of 30 or 40 megawatts. And a plant would just bolt together 10 or 20 or 30 or 40 of these modules and the modules when they’re expanded could be taken away and buried safely without the problem of having to deal with the radioactive waste either. So there’s certainly a nice edge here, but we’ve got to get over some of these people that are just opposed in principle, right?

Matt: And the problem is that the immense cost of licensing and regulation leads to gigantism, leads to us building two and a half gigawatt things. And as a result, we can only afford to do them one at a time, we’ve built them like we’ve built Egyptian pyramids. You do one and then 40 years later, you do another. Well, that’s not the way to keep the expertise to learn, to improve, to et cetera. So as you say, getting smaller and modular has got to be the way to go for nuclear. But people have talked about this for 10 years. They’ve never quite managed to get off the ground. I hope they do soon.

Jim: Yeah. Then of course there’s been failures. The thing can look quite interesting South African Pebble Bed technology, Fluid Pebble Bed technology didn’t quite work, but I thought it looked kind of interesting, but we’ll see what happens. One to keep an eye on. Now, our last topic is that you warn that we’re in the beginning stages, or maybe part of the way along into an innovation famine, particularly in the West. Why don’t you tell us that story and what we need to be worried about here, maybe what we should do about it.

Matt: Well, if you ask people. They think they live in … We think we live in a time of accelerating over abundant innovation. And we’re thinking of the way we need a new mobile phone every two years or whatever it is. And it’s true that in the digital area, there is constant, and rapid, and spectacular innovation happening. That in software and apps and programs and social media, there is ferment of change. But as Peter Thiel has pointed out. We wanted flying cars and we got 140 characters. In other words, most of our innovation energy is going into digital stuff and actually less is going into transforming transport or transforming energy system than was true a generation or two ago. It’s very striking when you think about it that the 747 was first entered service in 1969.

Matt: And it only retired for the last time last year. That’s 51 years. Imagine the same computer design being used for that long, or imagine airplanes staying that long in the first half of the 20th century, from the Wright brothers through to the plane that Chuck Yeager was flying. That’s the period of time we’re talking about. So actually we’ve seen a tremendous slowing down of innovation in a lot of sort of bigger technologies like transportation and so on.

Matt: And I think that’s a real problem. And I think there are three forces slowing it down. One is the barriers to entry that big corporations put in the way of competitors, of insurgents. I think this is an increasing problem. More and more big companies are in a position to lobby governments to say, don’t let somebody else do something that’s going to undermine my revenue stream. They may not think that that’s what they’re doing, but often it is what they’re doing. The other is government regulators, which get more and more fussy about telling you what you can and can’t do when you’re off innovating something.

Matt: So for example, if you want to invent a new medical device, before the pandemic, it would take you at least four years to get approval for use in that and a lot of money. Now in the pandemic, we’ve shown that we can speed that up, whether it’s a DNA testing device or a vaccine, we can speed up the approval process. So I think the lesson that we should be speeding up the process of approval is quite strong. And the third source of opposition that is preventing us doing more innovation in my view is the fear mongering from various pressure groups. Whether it’s talking about the effect of artificial intelligence or unemployment, or malicious AI, or whether it’s talking about genetic modification, gene editing and things like that, and how dangerous they might be.

Matt: There are lots of pressure groups out very well funded that try to scare people. They don’t always succeed. If you think about cell phones, they tried quite hard to scare us into thinking that cell phones might fry our brains in the early 1990s, but cell phones were too damn useful. We couldn’t do without them. We decided that wasn’t the case with some other technologies. So I think that those three forces have managed to slow down the rate at which we innovate, particularly in Western countries. And that’s a real problem. I think we need to find ways to make innovation easier again.

Jim: I think that’s a good warning for us all, as we think about our political leaders and our social operating systems, to make sure that we can continue this great enrichment that’s been going on for 300 years. Now, the last item is you do make a prediction about one technology that had some visibility it’s going to fail. Let’s hear your diagnosis of Hyperloop. Generally, Elon Musk, not a great guy to bet against, but you have a pretty interesting argument on why Hyperloop isn’t going to make it.

Matt: Well, Elon Musk threw this idea out there and he then said, “Look, I’m not going to try and develop it myself, but let other people do it.” That we should build these vacuum tubes underground or on the ground. And we should allow 700 MPH capsules in them to transport people from Los Angeles to San Francisco or wherever it might be. And the more I thought about it, the more it didn’t sort of make sense to me. So I began to read up more and more, and then I found a bunch of engineers who were incandescent with theory about how over hyped this idea was and pointing out some of the practical problems.

Matt: I mean if it’s a vacuum tube, then the whole thing’s got to be evacuated. That means it’s going to be quite expensive to build. You can have leaks on mile 35, there’s a leaking valve. So the air’s getting in. If the pods that we’re going to go in are going to have to … Let’s say there’s 20 people in a pod. How often are they going to have to leave the station if it’s going to transport as many people down this one pipe from LA to San Francisco as the airline industry can do? Well, the answer is every 15 seconds, another pod has got to leave. Well, how are you going to queue up in the airport to make sure you catch your pod or whatever it might be? How’s that going to work?

Matt: And any way, what happens to the vacuum when you’re getting into the pod? How do you seal a bit around the car, but not in the rest of the tube? The practical problems of this are immense. So I think it’s a case where it’s a lovely idea in theory, but the more you think about it, the more likely it is to be one of these things that sounds cheap and gets more and more and more expensive as you come to build it out and to do it in practice. Somebody joked that Elon has just rediscovered the bus. He tweeted, and he said, “You know what, the great thing is you could have 20 people in one pod going to one direction and 20 people in another pod going to another. Elon, it’s called a bus.”

Jim: I love it. Well, anyway, that’s our final word today. I want to thank Matt Ridley for a very interesting conversation about a really interesting book, which I can highly recommend, How Innovation Works: And Why It flourishes in Freedom.

Matt: Well, Jim, it’s been a real pleasure talking to you as an entrepreneur yourself, and it’s always interesting to talk about these things.

Production services and audio editing by Jared Janes Consulting, Music by Tom Muller at